EXHIBIT (h)(6)
SOUND SHORE FUND, INC.
COMPLIANCE SERVICES AGREEMENT
AGREEMENT made as of the 1st of October 2004 and as amended and restated on
January 25, 2007, by and between Sound Shore Fund, Inc., a Maryland
corporation, with its principal office and place of business at Two Xxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxxx 00000 (the "Fund"), and Foreside Compliance Services,
LLC, a Delaware limited liability company with its principal office and place
of business at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxx 00000 ("FCS").
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company and
issues its shares of common stock, $0.001 par value (the "Shares"); and
WHEREAS, the Fund desires that FCS perform certain compliance services and
FCS is willing to provide those services on the terms and conditions set forth
in this Agreement;
NOW THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, the Fund and FCS hereby agree as follows:
SECTION 1. APPOINTMENT; DELIVERY OF DOCUMENTS
(a) The Fund hereby appoints FCS, and FCS hereby agrees, to provide a Chief
Compliance Officer ("CCO"), as described in Rule 38a-1 of the 1940 Act ("Rule
38a-1") and a Treasurer ("PFO"), to the Fund for the period and on the terms
and conditions set forth in this Agreement.
(b) In connection therewith, the Fund has delivered to FCS copies of:
(i) the Fund's Articles of Incorporation and Bylaws (collectively, as amended
from time to time, "Organizational Documents"); (ii) the Fund's current
Registration Statement, as amended or supplemented, filed with the U.S.
Securities and Exchange Commission ("SEC") pursuant to the Securities Act of
1933, as amended (the "Securities Act"), or the 1940 Act (the "Registration
Statement"); (iii) the Fund's current Prospectus and Statement of Additional
Information (collectively, as currently in effect and as amended or
supplemented, the "Prospectus" or "SAI", as the case may be, or the "Disclosure
Documents"); (iv) each plan of distribution or similar document adopted by the
Fund under Rule 12b-1 under the 1940 Act ("Plan") and each current shareholder
service plan or similar document adopted by the Fund ("Service Plan");
(v) copies of the Fund's current annual and semi-annual reports to
shareholders; and (vi) all policies, programs and procedures adopted by the
Fund with respect to the Funds (e.g., repurchase agreement procedures), and
shall promptly furnish FCS with all amendments of or supplements to the
foregoing. The Fund shall deliver to FCS a certified copy of the resolution of
the Board of Directors of the Fund (the "Board") appointing FCS hereunder and
authorizing the execution and delivery of this Agreement.
SECTION 2. DUTIES OF FCS
(a) Subject to the approval of the Board, FCS shall make available a
qualified person to act as the Fund's CCO who is competent and knowledgeable
regarding the federal securities laws. FCS' responsibility for the activities
of the CCO are limited to the extent that the Board shall make all decisions
regarding the designation, termination and level of compensation of the CCO as
provided by Rule 38a-1.
(b) With respect to the Fund, the CCO shall:
(i) Report directly to the Board;
(ii) Review and administer the Fund's compliance program policies and
procedures including those policies and procedures of the Fund's
adviser, administrator, principal underwriter and transfer agent
(collectively, Service Providers") that relate to the Fund;
(iii) Conduct periodic reviews of the Fund's compliance program to
incorporate any new or changed regulations, best practice
recommendations or other guidelines that may be appropriate;
(iv) Review no less frequently than annually, the adequacy of the
policies and procedures of the Fund and its Service Providers and the
effectiveness of their implementation;
(v) Apprise the Board of significant compliance events at the Fund or
its Services Providers;
(vi) Design testing methods for the Fund's compliance program policies
and procedures;
(vii) Perform and document periodic testing of certain key control
procedures (as appropriate to the circumstances), including reviewing
reports, investigating exceptions, and making inquiries of Fund
management and Service Providers;
(viii) Conduct periodic site visits to advisers and other Service
Providers as necessary;
(ix) Provide training and deliver updates to the Fund or its Service
Providers, as necessary;
(x) Establish a quarterly reporting process to the Board, including both
written and oral reports. The CCO will attend regularly scheduled board
meetings as well as special meetings on an as-needed basis.
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(xi) Prepare a written annual report for the Board. Such report shall,
at a minimum, address (A) the operation of the Fund's and its Service
Providers' policies and procedures since the last report to the Board;
(B) any material changes to such policies and procedures since the last
report; (C) any recommendations for material changes to the policies and
procedures as a result of the periodic or annual reviews referred to in
Sections 2(b)(iii) and (iv) above; and (D) any "material compliance
matters" (as defined in Rule 38a-1) since the date of the last report;
and
(xii) No less than annually, the CCO shall meet separately with the
Fund's independent Directors.
(c) With respect to the Fund, FCS shall
(i) Provide compliance support for intermediary agreements that pertain
to the Fund, such as shareholder service and similar service agreements,
other than those agreements for which FCS is required to provide the
services pursuant to the Distribution Agreement between the Fund and FCS
dated January 23, 2006 ("Distribution Agreement");
(ii) Review and approve communications with the public including
quarterly financial statements not otherwise required to be reviewed by
FCS pursuant to the Distribution Agreement, for the Fund's compliance
with applicable law;
(iv) Assist the Fund with compliance matters as requested.
(d) With respect to the Fund, FCS shall, subject to the approval of the
Board, make available a qualified person who is competent and knowledgeable
regarding the management and internal controls of the Fund to serve as the
Fund's Treasurer who will have the authority normally incident to such office
including the authority to execute documents required to be executed by the
Fund's "principal financial officer" (PFO).
(e) FCS shall provide such other services and assistance relating to the
affairs of the Fund as the Fund may, from time to time, reasonably request
pursuant to mutually acceptable compensation and implementation agreements.
(f) FCS shall maintain records relating to its services, such as compliance
policies and procedures, relevant Board presentations, annual reviews, and
other records, as are required to be maintained under the 1940 Act and Rule
38a-1 thereunder. Such reports shall be maintained in the manner and for the
periods as are required under the applicable rule or regulation. The books and
records pertaining to the Fund that are in the possession of FCS shall be the
property of the Fund. The Fund, or the Fund's authorized representatives, shall
have access to such books and records at all times during FCS' normal business
hours. Upon the
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reasonable request of the Fund, copies of any such books and records shall be
provided promptly by FCS to the Fund or the Fund's authorized representatives
at the Fund's expense.
(g) Nothing contained herein shall be construed to require FCS to perform
any service that could cause FCS to be deemed an investment adviser for
purposes of the 1940 Act or the Investment Advisers Act of 1940, as amended, or
that could cause the Fund to act in contravention of the Fund's Prospectus or
any provision of the 1940 Act. Except with respect to FCS' duties as set forth
in this Section 2 and except as otherwise specifically provided herein, the
Fund assumes all responsibility for ensuring that the Fund complies with all
applicable requirements of the Securities Act, the Exchange Act, the 1940 Act
and any laws, rules and regulations of governmental authorities with
jurisdiction over the Fund. All references to any law in this Agreement shall
be deemed to include reference to the applicable rules and regulations
promulgated under authority of the law and all official interpretations of such
law or rules or regulations.
(h) In order for FCS to perform the services required by this Section 2, the
Fund (i) shall take reasonable steps to encourage all Service Providers to
furnish any and all information to FCS as reasonably requested by FCS, and
assist FCS as may be required and (ii) shall take reasonable steps to obtain
the result that FCS has access to all records and documents maintained by the
Fund or any service provider to the Fund.
SECTION 3. STANDARD OF CARE; LIMITATION OF LIABILITY; INDEMNIFICATION
(a) FCS shall be under no duty to take any action except as specifically set
forth herein or as may be specifically agreed to by FCS in writing. FCS shall
use its best judgment and efforts in rendering the services described in this
Agreement. FCS shall not be liable to the Fund or any of the Fund's
stockholders for any action or inaction of FCS relating to any event whatsoever
in the absence of bad faith, reckless disregard, gross negligence or willful
misfeasance in the performance of FCS' duties or obligations under this
Agreement. Further, FCS shall not liable to the Fund or any of the Fund's
stockholders for any action taken or failure to act in good faith reliance upon:
(i) the advice and opinion of Fund counsel; and
(ii) any certified copy of any resolution of the Board;
and FCS shall not be under any duty or obligation to inquire into the validity
or invalidity or authority or lack thereof of any statement, oral or written
instruction, resolution, signature, request, letter of transmittal,
certificate, opinion of counsel, instrument, report, notice, consent, order, or
any other document or instrument which FCS reasonably believes in good faith to
be genuine.
(b) The Fund agrees to indemnify and hold harmless FCS, its employees,
agents, directors, officers and managers and any person who controls FCS within
the meaning of
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section 15 of the Securities Act or Section 20 of the Exchange Act ("FCS
Indemnitees"), against and from any and all claims, demands, actions, suits,
judgments, administrative proceedings or investigations, liabilities, losses,
damages, costs, charges, reasonable counsel fees and other expenses of every
nature and character arising out of or in any way related to FCS's actions
taken or failures to act with respect to the Fund in connection with the
performance of any duties or obligations under this Agreement (a "FCS Claim");
provided, however, that nothing contained herein shall entitle a FCS Indemnitee
to indemnification with respect to any FCS Claim arising from FCS' own bad
faith, reckless disregard, negligence or willful malfeasance, or breach of this
Agreement . For purposes of this Agreement, FCS' bad faith, willful
malfeasance, or reckless disregard shall not include any action taken or not
taken by FCS consistent with the last sentence of Section 3(a). Further, the
Fund shall not be required to indemnify any FCS Indemnitee if, prior to
confessing any FCS Claim against the FCS Indemnitee, FCS or the FCS Indemnitee
does not give the Fund written notice of and reasonable opportunity to defend
against the FCS Claim in its own name or in the name of the FCS Indemnitee.
(c) FCS agrees to indemnify and hold harmless the Fund, its employees,
agents, directors, officers and managers ("Fund Indemnitees"), against and from
any and all claims, demands, actions, suits, judgments, administrative
proceedings and investigations, liabilities, losses, damages, costs, charges,
reasonable counsel fees and other expenses of every nature and character
arising out of or in any way related to (i) FCS' actions taken or failures to
act with respect to the Fund that are not consistent with Section 3(a);
(ii) any breach of this Agreement with FCS; or (iii) any breach of FCS'
representations set forth in Section 4 (a "Fund Claim"). FCS shall not be
required to indemnify any Fund Indemnitee if, prior to confessing any Fund
Claim against the Fund Indemnitee, the Fund or the Fund Indemnitee does not
give FCS written notice of and reasonable opportunity to defend against the
Fund Claim in its own name or in the name of the Fund Indemnitee.
(d) FCS shall not be liable for the errors of other service providers to the
Fund or their systems.
(e) The Fund, and not FCS, shall be solely responsible for approval of the
designation and compensation of the Fund CCO, as well as for removing the CCO
from his or her responsibilities related to the Fund in accordance with Rule
38a-1. Therefore, notwithstanding the provisions of this section 3, the Fund
shall supervise the activities of the Fund CCO with regard to such activities.
SECTION 4. REPRESENTATIONS AND WARRANTIES
(a) FCS represents and warrants to the Fund that:
(i) It is a limited liability company duly organized and existing and in
good standing under the laws of the State of Delaware;
(ii) It is duly qualified to carry on its business in the State of Maine;
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(iii) It is empowered under applicable laws and by its Operating
Agreement to enter into this Agreement and perform its duties under this
Agreement;
(iv) All requisite corporate proceedings have been taken to authorize it
to enter into this Agreement and perform its duties under this Agreement;
(v) It has access to the necessary facilities, equipment, and personnel
to assist the CCO in the performance of his or her duties and
obligations under this Agreement;
(vi) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of FCS, enforceable against FCS in
accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties;
(vii) It shall make available a person who is competent and
knowledgeable regarding the federal securities laws and is otherwise
reasonably qualified to act as a CCO and who will, in the exercise of
his or her duties to the Fund, act in good faith and in a manner
reasonably believed by him or her to be in the best interests of the
Fund ;
(viii) It shall compensate the CCO fairly, subject to the Board's right
under any applicable regulation (e.g., Rule 38a-1) to approve the
designation, termination and level of compensation of the CCO. In
addition, it shall not retaliate against the CCO should the CCO inform
the Board of a compliance failure or take aggressive action to ensure
compliance with the federal securities laws by the Fund or a Service
Provider;
(ix) It shall report to the Board promptly if FCS learns about CCO
malfeasance or in the event the CCO is terminated as a CCO by another
Fund; and
(x) It shall report to the Board if at any time the CCO is subject to
the "bad boy" disqualifications as set forth in Section 15(b)(4) of the
Exchange Act or Section 9 of the 0000 Xxx.
(b) The Fund represents and warrants to FCS that:
(i) It is a corporation duly organized and existing and in good standing
under the laws of the State of Maryland and is qualified to do business
and is in good standing under the laws of the State of Maryland;
(ii) It is empowered under applicable laws and by its Fund Documents to
enter into this Agreement and perform its duties under this Agreement;
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(iii) All requisite corporate proceedings have been taken to authorize
it to enter into this Agreement and perform its duties under this
Agreement;
(iv) It is an open-end management investment company registered under
the 1940 Act;
(v) This Agreement, when executed and delivered, will constitute a
legal, valid and binding obligation of the Fund, enforceable against the
Fund in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties;
(vi) A registration statement under the Securities Act and the Exchange
Act is currently effective and will remain effective and appropriate
State securities law filings have been made and will continue to be made
with respect the Fund; and
(vii) The CCO shall be covered by the Fund's Directors &
Officers/Errors & Omissions Policy (the "Policy"), and the Fund shall
use reasonable efforts to ensure that the CCO's coverage be
(a) reinstated should the Policy be cancelled; (b) continued after the
CCO ceases to serve as the Fund's CCO on substantially the same terms as
such coverage is provided for the Fund officers after such persons are
no longer officers of the Fund; or (c) continued in the event the Fund
merges or terminates, on substantially the same terms as such coverage
is provided for the Fund officers (but for a period no less than six
years). The Fund shall provide FCS with proof of current coverage,
including a copy of the Policy, and shall notify FCS immediately should
the Policy be cancelled or terminated.
SECTION 5. COMPENSATION AND EXPENSES
(a) In consideration of the compliance services provided by FCS pursuant to
this Agreement, the Fund shall pay FCS the fees set forth in Appendix A hereto.
All fees payable hereunder shall be accrued daily by the Fund. The fees
payable for the services listed in Appendix A hereto shall be payable monthly
in arrears on the first business day of each calendar month for services
performed during the prior calendar month. Any out-of-pocket charges incurred
by FCS as set forth in Appendix A shall be paid as incurred. If fees begin to
accrue in the middle of a month or if this Agreement terminates before the end
of any month, all fees for the period from that date to the end of that month
or from the beginning of that month to the date of termination, as the case may
be, shall be prorated according to the proportion that the period bears to the
full month in which the effectiveness or termination occurs. Upon the
termination of this Agreement, the Fund shall pay to FCS such compensation, as
shall be payable prior to the effective date of termination.
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(b) FCS may, with respect to questions of law relating to its services
hereunder, apply to and obtain the advice and opinion of Fund counsel. The
costs of any such advice or opinion shall be borne by the Fund.
(c) FCS shall not be responsible for and will not assume the obligation for
payment of the expenses of the Fund, including, without limitation: (i) the fee
payable under this Agreement; (ii) the fees payable to the investment adviser
under an agreement between the investment adviser and the Fund; (iii) expenses
of issue, repurchase and redemption of Fund Shares; (iv) interest charges,
taxes and brokerage fees and commissions; (v) premiums of insurance for the
Fund, the directors and officers and fidelity bond premiums; (vi) fees,
interest charges and expenses of third parties, including Fund counsel, counsel
to the Fund's independent directors, independent public accountants, compliance
audit firms, custodians, transfer agents, dividend disbursing agents and Fund
accountants; (vii) fees of pricing, interest, dividend, credit and other
reporting services; (viii) costs of membership in trade associations;
(ix) telecommunications expenses; (x) transmission expenses; (xi) costs of
maintaining the Fund's existence; (xii) costs of preparing, filing and printing
the Fund's Prospectus, subscription application forms and stockholder reports
and other communications and delivering them to existing stockholders, whether
of record or beneficial; (xiii) expenses of meetings of stockholders and proxy
solicitations therefor; (xiv) costs of maintaining books of original entry for
portfolio and Fund accounting and other required books and accounts and of
calculating the net asset value of Shares; (xv) costs of stationery, supplies
and postage; (xvi) fees and expenses of the Fund's directors and officers
(except those incurred by officers affiliated with FCS); (xvii) costs of other
personnel performing services for the Fund; (xviii) costs of Board, Board
committee, and other corporate meetings; (xix) SEC registration fees and
related expenses; and (xx) state, territory or foreign securities laws
registration fees and related expenses.
SECTION 6. EFFECTIVENESS, DURATION, TERMINATION AND ASSIGNMENT
(a) This Agreement shall become effective on the date indicated above or
such time FCS commences providing services under this Agreement, whichever is
later. Upon effectiveness of this Agreement, this Agreement shall constitute
the entire agreement between the parties and shall supersede all previous
agreements between the parties, whether oral or written relating to the Fund.
(b) This Agreement shall continue in effect until terminated.
(c) This Agreement may be terminated at any time, without the payment of any
penalty (i) by the Board on sixty (60) days' written notice to FCS or (ii) by
FCS on sixty (60) days' written notice to the Fund; provided that the
provisions of this Agreement related to services pursuant to Section 2, may be
terminated at any time by the Board, effective upon written notice to FCS,
without the payment of any penalty; the remaining portions of this Agreement
shall be considered severable and not affected.
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(d) The provisions of Sections 2(e), 3, 6(d), 6(e), 7, 8, 10, 11, and 12
shall survive any termination of this Agreement.
(e) This Agreement and the rights and duties under this Agreement otherwise
shall not be assignable by either FCS or the Fund except by the specific
written consent of the other party. All terms and provisions of this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
SECTION 7. CONFIDENTIALITY
Each Party shall comply with the laws and regulations applicable to it in
connection with its use of Confidential Information, including, without
limitation, Regulation S-P (if applicable). FCS agrees to treat all records and
other information related to the Fund as proprietary information of the Fund
and, on behalf of itself and its employees, to keep confidential all such
information, except that FCS may
(a) Release such other information (i) as approved in writing by the Fund,
which approval shall not be unreasonably withheld and may not be withheld where
FCS is advised by counsel that it may be exposed to civil or criminal contempt
proceedings for failure to release the information (provided, however, that FCS
shall seek the approval of the Fund as promptly as possible so as to enable the
Fund to pursue such legal or other action as it may desire to prevent the
release of such information) or (ii) when so requested by the Fund.
SECTION 8. FORCE MAJEURE
FCS shall not be responsible or liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control
including, without limitation, acts of civil or military authority, national
emergencies, fire, mechanical breakdowns, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation, communication
system or power supply. In addition, to the extent FCS' obligations hereunder
are to oversee or monitor the activities of third parties, FCS shall not be
liable for any failure or delay in the performance of FCS' duties caused,
directly or indirectly, by the failure or delay of such third parties in
performing their respective duties or cooperating reasonably and in a timely
manner with FCS.
SECTION 9. ACTIVITIES OF FCS
(a) Except to the extent necessary to perform FCS' obligations under this
Agreement, nothing herein shall be deemed to limit or restrict FCS' right, or
the right of any of FCS' managers, officers or employees who also may be a
director, officer or employee of the Fund, or who are otherwise affiliated
persons of the Fund, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of
a similar or dissimilar nature, or to render services of any kind to any other
corporation, trust, firm, individual or association.
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(b) Upon notice to the Fund, FCS may subcontract any or all of its functions
or responsibilities pursuant to this Agreement to one or more persons, which
may be affiliated persons of FCS, who agree to comply with the terms of this
Agreement; provided, that any such subcontracting shall not relieve FCS of its
responsibilities hereunder. FCS may pay those persons for their services, but
no such payment will increase FCS' compensation or reimbursement of expenses
from the Fund.
SECTION 10. COOPERATION WITH INDEPENDENT PUBLIC ACCOUNTANTS
FCS shall cooperate with the Fund's independent public accountants and shall
take reasonable action to make all necessary information available to the
accountants for the performance of the accountants' duties.
SECTION 11. LIMITATION OF STOCKHOLDER AND DIRECTOR LIABILITY
The directors of the Fund and the stockholders of the Fund shall not be
liable for any obligations of the Fund under this Agreement, and FCS agrees
that, in asserting any rights or claims under this Agreement, it shall look
only to the assets and property of the Fund.
SECTION 12. MISCELLANEOUS
(a) Neither party to this Agreement shall be liable to the other party for
consequential, special or indirect damages under any provision of this
Agreement.
(b) This Agreement shall be governed by, and the provisions of this
Agreement shall be construed and interpreted under and in accordance with, the
laws of the State of Delaware.
(c) This Agreement may be executed by the parties hereto in any number of
counterparts, and all of the counterparts taken together shall be deemed to
constitute one and the same instrument.
(d) If any part, term or provision of this Agreement is held to be illegal,
in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be illegal or
invalid. This Agreement shall be construed as if drafted jointly by both FCS
and Fund and no presumptions shall arise favoring any party by virtue of
authorship of any provision of this Agreement.
(e) Section headings in this Agreement are included for convenience only and
are not to be used to construe or interpret this Agreement.
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(f) Notices, requests, instructions and communications received by the
parties at their respective principal places of business, or at such other
address as a party may have designated in writing, shall be deemed to have been
properly given.
(g) Nothing contained in this Agreement is intended to or shall require FCS,
in any capacity hereunder, to perform any functions or duties on any day other
than a Fund business day. Functions or duties normally scheduled to be
performed on any day which is not a Fund business day shall be performed on,
and as of, the next Fund business day, unless otherwise required by law.
(h) The term "affiliate" and all forms thereof used herein shall have the
meanings ascribed thereto in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
SOUND SHORE FUND, INC.
By: -----------------------------
Name: -----------------------------
Title: -----------------------------
FORESIDE COMPLIANCE SERVICES, LLC
By: -----------------------------
Xxxxx X. Xxxxxxx
Managing Partner
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SOUND SHORE FUND, INC.
COMPLIANCE SERVICES AGREEMENT
APPENDIX A
AS OF OCTOBER 1, 2004
AND AS AMENDED AND RESTATED JANUARY 25, 2007
(1) COMPLIANCE OFFICER SERVICES
(a) Standard Annual Fee:
$40,000
(2) OTHER COMPLIANCE SERVICES
(a) Basis Point Fee (% of Fund Annual Average Daily Net Assets):
0.0045%
(B) WEBSITE MAINTENANCE FEE:
$500 PER MONTH
(3) PRINCIPAL FINANCIAL OFFICER SERVICES
(a) $25,000 per year
(4) OUT-OF-POCKET AND RELATED EXPENSES
The Fund shall reimburse FCS for the following out-of-pocket and ancillary
expenses:
(i) communications
(ii) postage and delivery services
(iii) record storage and retention (imaging, microfilm and shareholder
record storage)
(iv) reproduction
(v) reasonable travel expenses for the CCO incurred in connection with
his oversight of the compliance programs of the Service Providers
(vi) reasonable travel expenses incurred in connection with travel
requested by the Board
(vii) other expenses incurred in connection with providing the services
described in this Agreement if approved by the Fund
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